As Energy Prices Rise, U.S. Green-Lights India's Purchases of Russian Oil
Under pressure to control oil prices amidst a closure of the Strait of Hormuz, the White House is backtracking on its efforts to pressure India into refusing Russian oil. In hopes of easing supply concerns, it is giving New Delhi temporary permission to increase the use of already-afloat Russian crude. "The waiver effectively acts as a green signal" for India to buy Russian oil at scale, Kpler analyst Sumit Ritolia told the Times.
The newly-promulgated rule from the Office of Foreign Asset Control is narrowly tailored: it waives all sanctions restrictions on the offloading of Russian crude in India, so long as the oil was loaded on a tanker before March 5. No other nations are allowed, and permission expires on April 4.
The move reconnects the close business relationship between Russian oil producers and Indian refiners, an arrangement which has played a major role in funding Russia's ongoing operations in Ukraine. In recent months the Trump administration has worked hard to push India out of buying Russian oil, going so far as to impose 50 percent tariffs on all Indian imports until New Delhi made a commitment to reduce Russian volumes; the policy objective was to apply more fiscal pressure to Moscow while talks on a Ukraine ceasefire were under way.
The administration cast the new Russian-oil waiver for India as a temporary change, with little fiscal effect on the invasion of Ukraine. "This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea," said U.S. Treasury Secretary Scott Bessent. "This stop-gap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage."
Some analysts suggested that the temporary concession was a rollback and a win for Moscow. "Trump [folds] on Russian oil sanctions," commented Bloomberg energy analyst Javier Blas. "Massive win for Putin."
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In the immediate term, the move allows Indian refiners to tap the large volume of Russian oil that is sitting aboard shadow fleet tankers, idling and awaiting buyers. This floating storage reserve amounts to at least 30 million barrels of crude, and it will cushion the sudden shutdown of Gulf exports, which India relies upon heavily.
China is also a major buyer of Russian gray-market grades, but it is well-supplied. Thanks to heavy purchasing of Iranian and Russian oil at discount rates over the last few months, it has about 900 million barrels in storage, enough to cover nearly 80 days worth of import volume. Another 30 million barrels of Iranian oil is afloat in Asian waters and awaiting Chinese buyers, energy analyst Sun Jianan told Reuters earlier this week.